How can you differentiate your products or services using a Blue Ocean Strategy?

1 What is a Blue Ocean Strategy?

A Blue Ocean Strategy is a concept developed by W. Chan Kim and Renee Mauborgne, two professors and authors of the best-selling book Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. They argue that most businesses operate in red oceans, where they compete fiercely for a limited share of existing demand, often by lowering prices, increasing features, or copying each other. This results in a bloody and costly battle that erodes profits and growth. On the other hand, a blue ocean is a market space where there is little or no competition, because you have created a unique value proposition that appeals to new or underserved customers, or eliminates or reduces the factors that your competitors emphasize. This way, you can create and capture new demand, increase your margins, and make your competitors irrelevant.

3 How to test and validate a Blue Ocean idea?

Before you launch your blue ocean idea, you need to test and validate it with your target market. Kim and Mauborgne recommend using a tool called the Buyer Utility Map, which helps you assess how your idea will improve the customer experience across six stages: purchase, delivery, use, supplements, maintenance, and disposal. For each stage, you need to ask yourself four questions: Does your idea unlock a new or exceptional utility for the customer? Is there a compelling reason for the customer to buy your idea? Does your idea offer the customer a superior price-performance trade-off? Is your idea easy to adopt and use by the customer? If you can answer yes to all these questions, you have a high chance of creating a blue ocean offering that will generate strong demand and loyalty.

4 How to communicate and promote a Blue Ocean offering?

Once you have validated your blue ocean offering, you need to communicate and promote it to your potential customers. Kim and Mauborgne suggest using a tool called the Three Tiers of Noncustomers, which helps you identify and reach out to three groups of people who are not buying from you or your competitors, but could be interested in your offering. The first tier consists of soon-to-be noncustomers, who are on the edge of leaving your industry or switching to another solution. The second tier consists of refusing noncustomers, who have rejected your industry or solution for various reasons, such as price, quality, or availability. The third tier consists of unexplored noncustomers, who are in distant or unrelated markets, but could find value in your offering if they knew about it. By understanding the needs, preferences, and pain points of these three tiers of noncustomers, you can craft a compelling value proposition and a persuasive marketing message that will convince them to try your blue ocean offering.

5 How to sustain and grow a Blue Ocean business?

Creating a blue ocean offering is not enough to guarantee long-term success. You also need to sustain and grow your business by protecting your competitive advantage and expanding your market share. Kim and Mauborgne advise using a tool called the ERRC Grid, which stands for Eliminate, Reduce, Raise, and Create. The ERRC Grid helps you summarize the key actions that you have taken or will take to create your blue ocean offering, and to monitor and update them as the market evolves. For example, you could eliminate or reduce the factors that are no longer relevant or valuable to your customers, such as outdated features, complex processes, or high costs. You could raise or create the factors that are emerging or increasing in importance or demand, such as innovation, customization, or sustainability. By doing this, you can keep your value proposition fresh and attractive, and avoid falling into the red ocean trap.